In brief - Government has reintroduced temporary measures allowing companies to electronically execute documents up until 1 April 2022. By that time, permanent measures for electronic execution are expected to be in place.
Under the new Treasury Laws Amendment (2021 Measures No. 1) Act 2021 ("2021 Measures"), companies can once again execute documents electronically. The Commonwealth Government introduced similar reforms in May 2020 which expired on 21 March 2021. This means that during the most recent lockdowns many transactions have been hindered due to physical documents needing to be signed.
While the 2021 Measures introduce a number of other measures, this article focuses on the execution of documents measures and what they mean for property transactions.
Existing requirements for execution of documents under the Corporations Act
Currently, section 127 of the Corporations Act 2001 (Cth) sets out the requirements for execution of documents by companies, including deeds. The most common method of execution by a company without using a common seal is signing by:
1. two directors of the company; or
2. a director and a company secretary; or
3. for a proprietary company that has a sole director who is also the sole company secretary – that director.
What is allowed under the 2021 Measures?
The 2021 Measures which apply to the execution of documents and deeds provide the following:
1. Signature on a physical copy or counterpart: a document is taken to have been signed by a person if:
(a) the person signs a copy or counterpart of the document that is in a physical form; and
(b) the copy or counterpart includes the entire contents of the document.
2. Signature on an electronic copy or counterpart: A document is taken to have been signed by a person if:
(a) a method is used to identify the person and to indicate their intention to sign a copy or counterpart of the document; and
(b) the copy or counterpart includes the entire contents of the document; and
(c) the method used was:
(i) as reliable as appropriate, given the purpose of the document; or
(ii) proven in fact to have fulfilled the functions described in (a).
The 2021 Measures have also re-introduced provisions to allow directors of the same company to sign physically separate (but identical) documents. The provisions provide that a copy or counterpart of a document does not need to include:
1. the signature of another person signing the document; or
2. any material included in the document to identify another person signing the document or to indicate another person’s intention in respect of the contents of the document.
How long will the 2021 Measures last?
The 2021 Measures are in force until 1 April 2022. By that time, the Government has indicated that permanent reforms should be in place for electronic execution.
What does this mean for property transactions?
The re-introduction of electronic execution by companies has been eagerly awaited by many industries, including the property industry, and particularly where the measures were effectively used between May 2020 and March 2021.
Transactions will be able to progress much more efficiently because signing a document electronically can occur in a matter of minutes, whereas physical execution on the same document was often taking weeks having to post documents to individuals around the country.
While the measures have a clear benefit where COVID-19 lockdowns are inevitable for the near future, there is utility in having these measures made permanent, particularly where conveyancing is going completely electronic from 11 October 2021. We look forward to seeing when the permanent provisions will be released.
This is commentary published by Colin Biggers & Paisley for general information purposes only. This should not be relied on as specific advice. You should seek your own legal and other advice for any question, or for any specific situation or proposal, before making any final decision. The content also is subject to change. A person listed may not be admitted as a lawyer in all States and Territories. © Colin Biggers & Paisley, Australia 2021.